INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 197 - Tainted share capital accounts  

Subdivision 197-A - What transfers into a company ' s share capital account does this Division apply to?  

SECTION 197-38   Exclusion for transfers connected with demutualisations of friendly society health or life insurers  

197-38(1)  
Subject to subsection (2), this Division does not apply to the transferred amount if:

(a) the amount is transferred in connection with a demutualisation of a company; and

(b) Division 316 (about demutualisations of friendly society health and life insurers) applies in relation to the demutualisation; and

(c) the company (the issuing company ) to whose *share capital account the amount is transferred is either:

(i) the *friendly society described in that Division; or

(ii) the company that owns all the shares in the friendly society.

197-38(2)  
Subsection (1) does not stop this Division from applying to so much, if any, of the transferred amount as exceeds the sum of the *cost bases of *shares in the issuing company that:

(a) are demutualisation assets (see section 316-110 ); and

(b) are issued to an entity covered by section 316-115 .

Note:

Section 316-115 identifies entities connected directly or indirectly with the friendly society and affected by the special cost base rules in section 316-105 .

197-38(3)  
For the purposes of subsection (2), work out the *cost base of a *share on the day on which it is issued, taking account of section 316-105 .